^^As Bill Miller would say^^
There are cogent and defensible arguments for both approaches to music reproduction as discussed here, plus an almost limitless number of other possibilities. Ultimately, I refuse to have to make a choice. Perhaps someday I will, but as long as I can forestall that day, I'll be happier doing it both ways.
With a multichannel music system, the key to excellence begins with identical speakers, supplemented with multiple subs. Yes, you want good electronics as well, but without a closely matching speaker set up, electronics can't do their best. Even in a well-treated or moderately-treated room, without matching speakers, it's an uphill battle. The good news is this works well even with modestly priced speakers, as long as they match well and are supported by well-implemented subs. Whether running 5.1 or 7.1 channels, current PLIIx, L7, and other systems can do an exceptional job of enhancing the listening experience.
However, one cannot assemble a hodge-podge of different speakers, even from the same brand and expect to get the best results.
For stereo listening, which I do a lot and enjoy immensely, I think the real benefit is that it's more practical from a budgetary standpoint to buy two very nice, even exceptional speakers than to buy five or seven pretty good ones. Plus, if there's any resistance in the household, getting two big speakers in the house is easier than five big speakers, not to mention getting five big speakers all in the right places.
The power and fidelity of two big, well-designed speakers is hard to deny, and the sheer joy of listening to them is a treat. Nonetheless, they are harder to set up right; in fact that can be an endless task of tweaking, moving, switching equipment, that is joy to some and bane to others. (I'm sure someone is thinking "I just stuck mine in the corners and they sound fine." Well, good for you.
Despite my enjoyment of stereo, I listen to more music in surround as a matter of preference. It is simply better. The set up is more predictable, the control over the listening environment is greater, the sound is more immersive and multi-dimensional, and the imaging is wider and deeper. When all the speakers are identical or closely-matched from the same line and supported by multiple subs, it is unbeatable for music, even "reprocessed" stereo.
Can we get one system that does it all? Maybe, but that's asking a lot. The normal hybrid system is better speakers up front and smaller satellites around the room, plus a sub somewhere. This seems fine for HT, but we're talking music here, so it's not as fine. For music, this system will probably sound better to more people in stereo than in multichannel.
For one thing, it's automatically biased toward the front with better speakers. That's a simple truth. Those speakers also are likely to get slightly better placement by necessity. In addition, in the switch between surround and two channel, there's likely to be a level-matching problem in that the fronts sound immediately louder and clearer. It must be better then, right? Even knowing this is a false comparison, I'm still influenced by it for a few seconds before I remember to match the levels before and after.
So that's a quick and general response for my part. I think both two-channel and surround systems have a place in the house if possible. I won't choose one if I don't have to, and I think it's very hard to have one system that does both two-channel and surround well, though certainly not impossible. I'm also writing only about music systems, not HT.
There are some excellent arguments for three-channel systems (L-C-R) as Sanjay mentions, as well as mono systems (whether single full-range driver, two-way, three-way, coaxial, etc.), four channel systems, and more. As always, I appreciate Roger's comments, since he spent his professional life dedicated to understanding and developing ways to make the listening experience better for all of us.